Data from the Treasury shows that 80% of borrowers of the controversial Help to Buy scheme are first time buyers mainly from outside London.

The government’s Help to Buy scheme has assisted 7,313 first time buyers to acquire their first home with loans of £1 billion since launch in October 2013.

Treasury figures show that the mean value of properties purchased or re-mortgaged was £151,597, significantly below the national average of £252,000 according to the Office for National Statistics (ONS).

For phase two of Help to Buy only 5% were located in London, 14% in the South East , 14% in the North West and 9% in the East Midlands.

How does Help to Buy work

Phase one of the Help to Buy scheme is an equity loan scheme available on new-build homes allowing first time buyers to apply for homes with a 5% deposit for properties up to £600,000 in value.

The government provide a 20% interest free equity loan and the remaining 75% would be a mortgage from a lender.

Phase two is is available to first time buyers and home movers. This is a mortgage guarantee scheme where the government guarantees 15% of the value of the property to the lender rather than provide a loan.

The homebuyer places a 5% deposit and 95% of the property value is a mortgage up to a value of £600,000.

The scheme encourages new homeownership for people that are renting and is not available to switching remortgage buyers or buy-to-let investors.

Help to Buy not affecting housing market

The Council of Mortgage Lenders (CML) has said the Help to Buy scheme did not appear to be amplifying prices for the more active UK housing market.

For phase one, the equity loan scheme has assisted in first time buyers with 20,548 homes in the 13 months since it began and in total 26,714 homes have been sold for phase one and two combined.

Of the total number of mortgage completions of 636,100, 45% were first time buyers and 70% were not in London or the south-east.

Of this figure only 4.2% were to Help to Buy purchases of which 85% were first time buyers and 77% from other parts of the UK suggesting it is the lack of supply in London and not Help to Buy that is driving prices higher.

Help with the deposit can come from family members as the equity release buyer can access money using a lifetime mortgage and give to a child or grandchild buying a new home.

What are your next steps?

Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or are a buy-to-let investor.

Start with a free mortgage quote or call us and we can take your details. Learn more by using the property value tracker chart, mortgage monthly cost calculator and equity release calculator.

For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property for home improvements, holidays or even gift to a family member or friend.

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